Truly resilient supply chains can only be built with complete visibility.
- The pandemic triggered supply chain disruptions that continue to reverberate globally
- Weaknesses throughout the supply chain were exposed, and erroneous, ill-informed assumptions were made that further exacerbated the problems
- Among the disruptions were container shortages and component shortages that slowed or curtailed production
- To build a resilient supply chain requires end-to-end control and visibility that can only be obtained with technology that supports timely, informative data analysis.
The COVID-19 pandemic may have been the catalyst for the ongoing supply chain crisis, triggering economic slowdowns, layoffs, and production stoppages, but it is certainly not the whole cause. Modern supply chains are complex, and what happens within them reverberates across the worldwide economy.
Mistaken assumptions were made that only exacerbated the problem. Manufacturers and shipping companies assumed that because of layoffs, demand would drop. As you know, demand for some items surged. As the pandemic eased, ports suffered bottlenecks, natural disasters disrupted freight movement, railways suffered congestion, and new legislation further complicated the movement of goods.
It is a time of uncertainty that has exposed weaknesses in the supply chain that are both difficult to solve and impossible to predict. Further disruptions are inevitable, and proactive leaders must do whatever they can to develop resilient supply chains. In this blog, we’ll briefly explore some recent supply chain disruptors and how to build a supply chain that can effectively navigate the future.
Recent Supply Chain Disruptions
It’s been a whirlwind, as manufacturers have been left scratching their heads about what’s going to happen next. Let’s take a quick look at some of the many things that have been affecting, and continue to affect, the supply chain. We mentioned the erroneous assumption that demand would decrease, which left factories idle and exacerbated shortages of some items. This is what happened next:
- Demand spiked for protective equipment: Everyone needed masks and gowns, most of which are produced in factories in China, so they ramped up production. This then led to …
- A shipping container shortage: Containers piled up across the world once they were emptied. This meant a shipping container shortage in China, which needed them the most as they were working night and day to produce protective gear.
- Ports became overwhelmed: Orders outstripped available containers, which caused the cost of a shipping container to skyrocket.
- Shortages led to other shortages: For example, a lack of computer chips meant major automakers had to slash production, and manufacturing of medical devices was delayed.
There were floods in Europe and China, Hurricane Ida on the Gulf Coast, and California wildfires that all played their part. Shipping costs have skyrocketed. There are labor shortages. Then there is legislation that limits doing business in certain areas of the world. The EU is working on a due diligence law, and Germany has already passed one. These laws obligate companies to create due diligence procedures in their global supply chains to protect both human rights and the environment. Can the United States be far behind? The Uyghur Forced Labor Protection Act is a step forward.
And the world has now been rocked by the Russian invasion of Ukraine, altering global supply chains forever. As worries of a new cold war mount, the business challenges resulting from the invasion are vast and affect industries right across the globe.
Resilient supply chains are able to resist or avoid disruptions and quickly recover, even during times of war. We offer these insights.
Create a Resilient Supply Chain
The COVID-19 pandemic was not the first of its kind to disrupt supply chains, of course, but no other epidemic has wrought so much havoc on global and domestic markets. This exposed structural weaknesses, including giving many a pause for thought about over-reliance on Chinese goods and the fact that most supply chains lack the ability to rapidly shift production and logistics in response to demand.
Supply chain resilience requires the ability to detect, respond, and recover from changes in the supply chain wherever they occur. Important elements for supply chain resilience include:
- End-to-end control: This requires prepping for a disruption before it happens, which means you must have an integrated supply chain supported by a digital platform that provides visibility and transparency into raw materials, semi-finished and finished goods. Insight into your suppliers, their suppliers, even their suppliers’ suppliers, and the entire chain of custody up to final consumption is vital. Control takes collecting the right data and using a digital platform that leverages artificial intelligence and machine learning along with algorithmic optimization, simulations, scenarios, and more. This then provides new insights for faster decision-making, automated planning, and the elimination of time, inventory, and risk throughout your supply chain.
- Diverse and redundant suppliers: When one supplier can’t deliver, you need one who can. You need qualified, vetted suppliers in various global locations who can provide additional capacity when there is a surge in demand or disruption in supply. For example, COVID restrictions in Asia shut down auto production because 70% of chip manufacturing happens in Taiwan and South Korea. When this happens, you need alternate sources in different regions that can deliver the parts.
- Inventory allocation and deployment optimization: Building inventories at critical points of your supply chain creates a just-in-case solution to weather supply chain disruptions. When it’s time to make critical decisions about where to position products, you need the ability to act, react and adapt based on actual customer demand and current market trends. Logility’s solutions for allocation and deployment use flexible rules and automated workflows to ensure product availability and high customer service, while efficiently managing inventory positions and directing products to channels and locations that best serve customer demand.
- Partner with supply chain technology experts: Digital mastery of your supply chain is required for success. Logility has over 50 years of experience as a leading global provider of supply chain management solutions.
Of course, all of this requires internal and external collaboration between all stakeholders, as well as a robust demand planning process. It’s all about creating a resilient enterprise by turning crisis into opportunity. As uncertainty remains high for supply chains, resilience has never been more important.
Build resilience with Logility
The Logility® Digital Supply Chain Platform accelerates the creation of sustainable and resilient supply chains by leveraging advanced analytics, machine learning, and artificial intelligence that empower your business with greater visibility. This means better sourcing decisions, accurate planning, accelerated cycle times, improved precision, increased operating performance – all the tools you need to weather supply chain disruptions – while meeting your sustainability goals.
We help organizations sense and respond to changing market dynamics and more profitably manage their global businesses to become resilient, sustainable enterprises. It’s time for a digital, sustainable supply chain. Reach out to our specialists today to discuss our supply chain solutions.